Hercules Files for Court Approval of Prepackaged Reorganization Plan

Source: www.gulfoilandgas.com 8/13/2015, Location: North America

Hercules Offshore, Inc that it has filed a pre-packaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code to continue its financial restructuring of the Company. The Company anticipates that, among other things, it will receive court authority to pay employee wages and benefits without interruption and continue to pay trade creditors and suppliers in the ordinary course of business. The Chapter 11 reorganization is expected to conclude in approximately 45-60 days.

As announced on July 13, the pre-packaged plan provides a substantial deleveraging transaction pursuant to which more than $1.2 billion of the Company's outstanding senior notes would be converted to 96.9% of new common equity, and $450 million in new debt financing would be provided by those holders of the senior notes who wish to participate on a pro rata basis (with the full amount backstopped by certain members of the steering group of noteholders), which would fully fund the remaining construction cost of the Hercules Highlander and provide additional liquidity to fund the Company's operations.

The filing follows the completion of the solicitation process of the Company's senior noteholders. The solicitation process resulted in overwhelming approval of the pre-packaged plan presented by the Company. More than 300 senior noteholders with aggregate holdings in excess of $1.2 billion of senior notes have voted to accept the Plan while only two holders with approximately $320,000 of the senior notes voted against the Plan.

"Today's filing is the next step in our financial restructuring. We are working toward a new capital structure which will provide a better foundation for Hercules to meet the challenges in the global offshore drilling market due to the downcycle in crude oil prices and expected influx of newbuild jackup rigs over the coming years," said President and Chief Executive Officer John T. Rynd. "The overwhelming support by the noteholders of the plan will enable Hercules to expedite the restructuring process and emerge by mid-fall. We do not expect any interruption to our daily operations as a result of today's filing."

The Company has sufficient resources and recurring revenue from operations to continue serving its customers. Hercules will remain focused on maintaining the highest quality of service and safety in daily operations, meeting customer needs and keeping employees and creditors informed as the restructuring progresses.

The plan also provides for the Company's current shareholders, despite being substantially "out of the money" by approximately $500 million, to have the opportunity to receive a pro rata portion of the remaining 3.1% of the new common equity, as well as certain warrants, subject to the requirements of the Plan and Court approval (all as more fully described in the Plan).